What the effect on the company overall net operating income

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Question - The management of Thermo Corporation is considering dropping product S38C. Data from the company's accounting system appear below:

Sales - $980,000

Variable expenses - 568,000

Fixed manufacturing expenses - 314,000

Fixed selling and administration expenses - 196,000

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $280,000 of the fixed manufacturing expenses and $140,000 of the fixed selling and administrative expenses are avoidable if product S38C is discontinued.

Required: What would be the effect on the company's overall net operating income if product S38C were dropped?

Reference no: EM131824877

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